ROGERS, Paul <br/><br/>
Value acceleration :  lessons from private-equity masters 

 -  jun.2002 
<br/><br/> Private-equity firms routinely achieve eye-popping returns ont eh business they operate. Their secret? A relentless focus on four management disciplines. Tough-minded mand highly disciplined, the best private-equity firms deliver returns on investment of more than 50  annually. Their success hingers on four straightforward management practices - ones that you can put to work at your own company. This article describe the four management disciplines vital to the success of the best PE firmes. First, for each business, they define an investiment thesis: a brief, clear statement of how to make the business more valuable within three to five years. The thesis, which guides all actions by the company, usually focuses on growth. PE firms know that the demonstration of a path to strong growth produces the ig returns on investiment. Second, they don't measure too much. They zero in on a few financial indicators that most clearly reveal the business's progress increasing its value. They watch cash more closely than imposing one set of measures across their entire portfolio. Third, they work their balance sheets, mining undervalued assets, turning fixed assets into sources of financing, and agressively managing their physical capital. Last, they make the center the shareholder. Corporate staffs in PE firms make unsentimental investment decisions, buying and selling businesses when the price is right and bringing in new management when perfomrance falters. These firms also keep their corporate centers extremely lean. By adopting these four disciplines, executives at public companies shoud be able to reap significantly greater returns from their own business units